Interest subvention for dairy infrastructure projects raised to 2.5%

The scheme envisages an interest subvention component of Rs1,167 crore, to be contributed by DAHD during the period 2018-19 to 2030-31 with spillover to first quarter of the FY 2031-32. The scheme also has a loan component of Rs8,004 crore to be contributed by NABARD. Rs2,001 crore shall be contributed by eligible end borrowers and Rs12 crore would be jointly contributed by National Dairy Development Board (NDDB) and the National Cooperative Development Corporation (NCDC).

Under Dairy Processing and Infrastructure Development Fund (DIDF) Government of India will provide interest subvention of up to 2.5 per cent to NABARD from 2019-20 (with effect from 30 July 2019) to 2030-31. Any further increase in the cost of funds will have to be borne by the end borrowers themselves.

The funding period (2017-18 to 2019-20) of the scheme is revised to 2018-19 to 2022-23 and the repayment period to be extended up to 2030-31 with spill over to first quarter of the FY 2031-32.

NABARD will try to keep the cost of borrowings to the minimum. It will also devise own strategy for borrowing so as to take advantage of lower interest rate in the markets to provide low cost of funds to the milk unions. NABARD has been asked to immediately initiate action plan for prompt disbursement of funds as and when the market is conducive to raising funds at affordable rates.

Altogether 37 sub-projects have been submitted under the scheme, with estimated cost of Rs4,458 crore and loan component of Rs3,207 crore, as on date only Rs1,110 crore has been disbursed in two instalments of loan by NABARD to NDDB for implementation of the scheme.

The scheme, covering 50,000 villages, will befit 9.5 million milk producers and help establish 28,000 bulk milk coolers with 14 million litres per day as additional milk chilling capacity.

This will creation of additional 210 tonnes per day milk drying capacity, besides aiding modernization, expansion and creation of milk processing capacity of 12.6 million litres per day.

Further, it will result in the creation of infrastructure of 5.98 million litres per day capacity for value-added dairy products to ensure remunerative prices to milk producers.

As per the implementation strategy, NABARD will raise funds from the market and lend it to NDDB/NCDC at 6 per cent and NDDB/NCDC, in turn, will lend it to eligible end borrowers at appropriate interest rate. 

DAHD will provide interest subvention equal to the difference or up to 2.5 per cent between the cost of raising capital by NABARD and the interest rate at which NABARD lends to NDDB/NCDC. In case there is any further increase in the cost of funds, it will be borne by the end borrowers themselves.